Are retailers leaving money on the table with limited channel strategies?

Alban Villani, Regional CEO for EMEA at CitrusAd, will discuss that when retailers add off-site advertising to their retail network offering, they are giving brands and themselves more opportunities to monetise their site and increase revenue.

Retail media is a win-win for retailers, brands and shoppers

Retailers create better shopper experiences and generate more revenue; brands benefit from a new, untapped advertising channel to reach in-market customers; and shoppers enjoy more relevant and personalised advertising. The opportunity is huge.

But for the majority of retailers, the idea of retail media is often most associated with on-site – retailers’ ecommerce sites – which is where much of the action has been, for now. According Insider Intelligence (April 2023), on-site placements will continue to be the focus this year, set to account for 85.5% of spending in 2023 and around 80% over the next few years.

But there is so much more to retail media than just on-site. When retailers add off-site advertising to their retail media offering, they are opening up new opportunities and channels to brands – and themselves – to increase revenue.

According to The State of Retail Media in 2023* report, a survey of retailers and brands sponsored by Epsilon/CitrusAd, there are opportunities (and money) being left on the table. 

Less than half (45%) of retailers say they have on-site as part of their retail media strategy, while only 37% offer off-site programmatic advertising. The majority still lean towards traditional monetisation tactics like coupons/promotions (58%), emails (53%) and increasingly working with influencers and joint social engagement (56%).

By focusing on these more traditional approaches, they are only scratching the surface of what’s possible. Rather than looking at on-site or off-site as distinct strategies, retailers should take a more holistic view, giving brands access to all of the channels they use when connecting with shoppers.

The shopper journey is complex and retail media networks that adopt an omnichannel approach allow brands to reach customers wherever they are and at whatever stage of the journey. A unified retail media network has the power to follow the full shopper journey, from initial engagement to final purchase. That means off-site interactions can be tied to on-site activity and also in-store, and vice versa.

From the brand perspective, they want to see a tangible return on their retail media investment. Channel reach is just the starting point, they need real evidence of the value in terms of sales and return on ad spend (ROAS). According to the report findings, total sales and ROAS are the topic two metrics (47%) followed by total reach (41%) and brand lift (37%).

When it comes to deciding where to spend their retail media advertising money, brands are strongly influenced by the quality of the retailer’s media network offering and performance. So, if overall quality of the network and performance are the top deciding factors, retailers will need to prioritise both when building or making technology improvements to their network. This also highlights that retailers cannot rely on their existing relationships with brands or name alone in retail media.

Brands also want transparency and control. This means transparency of campaign performance metrics and reporting, as well as control on how they set up and adapt their campaigns and who their audience is. For retailers, considering how the different pieces of their retail media network stacks interact with one another and how easy it is (or isn’t) for brands and advertisers to navigate all those pieces, will be fundamental to success. 

Two-thirds of retailers expect brand investment in retail media networks to increase over the next three years, while less than half of brands expect the same. With growing expectations like this, they will need to act quickly to ensure their networks are fit for purpose, both on-site and off-site, so they can attract a larger share of available budget.

By Alban Villani

Regional CEO for EMEA

CitrusAd

* In partnership with global research and analytics firm Phronesis Partners, Epsilon conducted a survey of 689 Director-level or above executives, including retailers and brands from mid-to large-sized enterprises, to gain insights into their perceptions of retail media networks and current and future state of the industry. The study was conducted in Q1 2023.